Advanstar downgraded by S&P

Published on January 03, 2012.

Chicago—Advanstar Inc., the parent company of Advanstar Communications, which produces the MAGIC trade shows, “has amended its credit agreement to allow it the flexibility to repurchase its term loan at prices below face value,” Standard & Poor's Ratings Services said in a press release. In the wake of this move by Advanstar, S&P lowered its corporate credit rating on Advanstar to CC, with a negative outlook, from B-.
S&P said the negative outlook “reflects that we would lower the corporate credit rating to SD [selective default] upon commencement of a subpar repurchase of the term loan.”
“The downgrade reflects our view that the company's recent amendment, which allows for subpar repurchases of its term debt, suggests a high probability of a subpar buyback,” said S&P credit analyst Daniel Haines, in a statement. “Furthermore, the term loan is trading at a significant discount to its par value, which provides the company an economic incentive to pursue a subpar buyback.”